Federal fraud investigations in Minnesota are intensifying after the U.S. Department of Justice (DOJ) announced that two out-of-state scammers pleaded guilty to stealing millions in taxpayer funds, marking the latest development in a widening crackdown under President Donald Trump.
The two Pennsylvania men defrauded Minnesota’s Housing Stabilization Services (HSS) program of roughly $3.5 million, according to federal prosecutors.
The program, launched in 2020 to help seniors and people with disabilities secure and maintain housing, ballooned far beyond expectations before the state shut it down in 2025.
Originally projected to cost under $3 million annually, payouts surged to about $104 million in 2024 with limited oversight.
The case, brought by the U.S. Attorney’s Office for the District of Minnesota alongside the DOJ Criminal Division’s Fraud Section, is one of many fraud prosecutions now moving forward.
“Minnesota will no longer be a haven for fraud under our watch,” said U.S. Deputy Attorney General Todd Blanche.
“The Justice Department has been investigating billions in taxpayer fraud across the country and has already successfully convicted 66 individuals and counting in Minnesota.”
Federal officials signaled that the prosecutions are only the tip of the iceberg.
“Criminal fraud not only robs taxpayers – it shatters trust in our institutions,” said U.S. Attorney General Pamela Bondi.
“Under President Trump’s leadership, yesterday’s convictions are just the beginning.
“Our prosecutors will work tirelessly to unravel criminal fraud schemes and charge their perpetrators in Minnesota and across the country.”
Millions Stolen by Out-of-State Operators
According to court documents, Anthony Waddell Jefferson and Lester Brown created businesses in Minneapolis and enrolled as HSS providers despite living in Philadelphia.
Prosecutors say the pair occasionally traveled to Minnesota to recruit homeless individuals and others to sign up for housing assistance services they never intended to provide, then pocketed the government payments.
Between February 2022 and June 2025, the men stole approximately $3.5 million while claiming to assist about 230 clients.
Both pleaded guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison.
Because HSS was funded through Minnesota’s Medicaid program, taxpayers nationwide helped finance the scheme.
“These defendants had no connection to Minnesota or its communities,” said DOJ Assistant Attorney General A. Tysen Duva.
“They traveled across the country for one purpose: to prey upon and steal millions in taxpayer dollars meant for people struggling with homelessness, addiction, and disabilities.
“Although programs like HSS are run by the states, they are funded with federal tax dollars.
“The Criminal Division will not stand by while fraudsters put all Americans’ tax dollars at risk.”
Expanding Scandal and Terror-Funding Allegations
The Minnesota fraud crisis first erupted publicly after late-November reports alleged that millions in taxpayer funds had been siphoned from the state’s welfare system and routed to the Somali-based terror group Al-Shabaab.
The reporting, by Chris Rufo and Ryan Thorpe in City Journal, detailed multiple fraud investigations already underway at the time.
Then-acting U.S. Attorney for the District of Minnesota Joe Thompson described the situation bluntly as a “crisis.”
Congressional scrutiny has since intensified. Multiple federal committee hearings have examined the scandal, and Minnesota Gov. Tim Walz and Attorney General Keith Ellison are scheduled to appear before the U.S. House Oversight Committee in March.
During a January hearing, Democrats defended Minnesota officials while accusing the Trump administration of politicizing fraud enforcement.
Democrat Rep. Lucy McBath (D-GA), ranking member on the committee, claimed:
“Minnesota lawmakers have also taken steps to reduce fraud in their state, strengthening the state’s ability to stop potential fraud sooner and improving investigations to hold those scammers accountable.
“President Trump has taken a very different approach to fraud.
“We know this hearing is not really about fraud. It is about trust.
“The Trump administration does not want you to trust these programs, because if you don’t trust them, they’re easier to destroy.”
Trump DOJ Signals More Charges Ahead
With guilty pleas now secured and broader investigations ongoing, federal prosecutors say additional charges are likely as authorities work to dismantle what officials describe as widespread taxpayer-funded fraud networks.
The Minnesota prosecutions underscore a central claim from the Trump administration: that aggressive enforcement, not expanded spending, is the key to protecting public funds from abuse.
And according to federal officials, the unraveling of Minnesota’s fraud schemes is only just beginning.

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